Interest rates typically cycle every 3 to 5 years.  While they are now higher than they were during recent years, they will eventually decline. They’re about where they were in May of 2006. Since then, they declined, increased, declined, and increased as expected, and the interest rate on a client’s loan that I did in 2006 is now 3.25% after his most recent refinance in 2020, which will probably be his “forever” loan!

That being said, delaying the purchase of a home due to high interest rates and home costs is unwise because the losses that will be incurred by waiting 1, 2, or 3 years will be quite significant. The flyer at this link vividly depicts just how significant.

There are 2 primary reasons why these losses are so high. First, on the average, homes in CA appreciate about 7.5% annually, so waiting to buy a $722,860 home for just 1 year will result in a loss (or increase in cost) of $54,215 (7.5% X $722,860), and subsequent appreciation losses will even be greater.

Second, when interest rates decline to a point where those who waited for this eventuality finally decide to buy, the buyers who purchased when they were higher will, obviously, refinance at the same much lower interest rates. At that time, because their mortgages will have been paid down over the years, the loan amounts will also be considerably lower compared to those for the buyers who waited to buy while the cumulative home appreciation occurred.  Consequently, the homeowners who bought when the interest rates were higher will have much lower monthly payments.

As the flyer states, buying a home should not be about the interest rate, but rather about the payment.  If you can qualify for it, can afford it, and are willing to make it, don’t wait because it’s never wise to wait for a lower interest rate!